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What the American Jobs Act Means for Nonprofits

As protesters turn out in growing numbers across the nation, it’s clear that the political world is full of agitation. And as the debate surrounding Obama’s American Jobs Act continues to develop, decisions being made right now could mean big changes for nonprofits.

We thought we’d provide a quick rundown of the recent events along with a few online tools to help you keep your volunteers, employees and donors informed and active without draining resources from your nonprofit’s mission.

The Jobs Act in Detail

President Obama has been on the road since the end of summer promoting his $447 billion American Jobs Act at universities, press events, and fundraisers, urging Congress with his new catchphrase: “Pass this bill right now.”

The bill would invest in our schools to prevent 280,000 teacher layoffs and create jobs for construction workers by funding renovation projects to modernize our schools and infrastructure. It would also make it easier for small businesses to grow and hire new workers by reducing the payroll tax for 98 percent of companies and providing incentives for those that hire veterans, people who’ve been out of work for over six months and recent grads.

In response to the nation’s brush with debt default, Obama has insured that the bill would be fully paid-for by closing loopholes that benefit large corporations and limiting tax deductions for America’s wealthiest.

This includes deductions for charitable donations – for the highest tax bracket, the deduction would go down from 35–28 percent – which raised flags for many nonprofits. Independent Sector, a resource for leaders of nonprofits and charitable foundations, started a petition asking the President and members of Congress to prevent legislation that could result in an estimated $7 billion decrease in contributions each year. Charitable donations have already suffered since the start of the recession in 2008, and Independent Sector believes that this would only hinder giving further, in turn diminishing nonprofits’ ability to provide services at a time when people need them most.

Senate Majority Leader Harry Reid responded to concerns about the bill’s funding, instead proposing a 5.6 percent surtax on people with an income over $1 million in place of the 28 percent cap on tax deductions. The White House has said that it is open to these changes as long as the provisions to spur job growth are left intact. The Senate voted down this version of the bill just last night, but does intend to vote on each individual proposal within the bill separately at some point in the future.

The tax incentives designed to address the steady nine percent unemployment rate come in the form of tax credits for businesses that hire veterans and the long-term unemployed. And while nonprofits account for 10 percent of our nation’s jobs and a sizeable chunk of the GDP, the credits for nonprofits are only worth two-thirds as much as those awarded to businesses.

The White House released a document explaining why nonprofits receive reduced tax credits, that the benefits are similar when you factor in the special tax status of nonprofits. You can watch President Obama respond to this issue directly during a recent speech on Youtube.

Keeping your Network Informed

Smaller nonprofits may not have the time or resources to lobby in Washington, but that doesn’t mean they can’t make their voices heard. Here are some simple yet effective ways you can encourage activism and awareness at your nonprofit:

Before releasing the specifics of the Job Act’s tax incentives, many worried that nonprofits would be ignored completely. Diana Aviv from Independent Sector sprang into action, using act.ly, a website where you can create petitions that users sign via Twitter. A recent online survey found that almost 90 percent of Americans believe that the Web is the best way to start a social movement campaign. Anyone with an internet connection can leverage the power of social media to draw attention to their cause.

Nonprofit VOTE is another great resource to engage your staff and volunteers, offering toolkits and webinars for nonprofit managers that want to register voters. Nonprofits by nature are a passionate, tight-knit community, and nonprofit managers are in a unique position to encourage people to support their cause with surprising success.

State Watch, on the blogroll of The Chronicle of Philanthropy, is a good way to keep your finger on the pulse of news and legislation that affects your nonprofit at the state level. As states look for ways to resolve their own budget crises, many nonprofits are in danger of losing benefits and funding. But by exercising the same innovation that has guided them through the economic downturn, nonprofits can take their cause to the web and show politicians that they provide creative solutions to the community’s needs and fulfill a role that complements federal and state programs.

These online resources are good options for nonprofits looking to take part in political discussions without diverting time and money. By encouraging your volunteers, staff and supporters to participate – it can be as simple as sending out an email linking them to a petition, a status update from your organization’s Facebook page, or providing voter registration paperwork so people can support your cause in the next election – you can ensure that your voice and that of your community are heard.

One thought on “What the American Jobs Act Means for Nonprofits”

Good article. The key to making this work for the overall good is to implement a tax formula as an incentive to fund community based nonprofits with a focus on High Growth Enterprises in the Green Economy while targeting the tax break to be Zone or U6 PUM specific. I commented on this strategy in some previous writings.